Markets to make a flat start of the F&O expiry week

The Indian markets continued the declining trend in the last session and snapped another week in red. Today, the start of the November F&O series expiry week is likely to be flat-to-cautious tracking mixed global cues; however volatility can be seen during the day. Traders will be a bit concerned with the Centre and states on Sunday failing to reach a consensus on who will control which set of assessees under GST. The said meeting which came ahead of the formal meeting of the all powerful GST Council on November 25, was held after the Centre and states were deadlocked over the issue at two previous meetings. The GST Council will meet again on November 25 to work out the modalities. Also, a private report has stated that India's economic growth is expected to fall by up to 1 percentage points over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms. There will be some buzz in the export oriented stocks, as the Commerce and Industry Minister Nirmala Sitharaman has called a meeting of export promotion councils and other sector representatives to discuss the impact of demonetisation. There will be lots of important result announcements that will be keep the markets buzzing.

The US markets made a modestly lower closing in last session, showing a lack of direction, though selling pressure remained relatively subdued, limiting the downside, despite report from Conference Board showing a slight increase by its index of leading economic indicators. The Asian markets have made a mixed start with some indices trading marginally in red on rising concern that Federal Reserve will pull the trigger on a rate hike in December.

Back home, Indian benchmarks carried forward their southbound journey for yet another session on Friday, as overall sentiment remained subdued after the US Federal Reserve chief indicated it may hike interest rates next month, leading to acceleration in capital outflows by foreign funds. Foreign Institutional Investors (FIIs) and Foreign Portfolio Investors (FPIs) have already sold equity shares worth over $1 billion in the past few trading days. Prospects for a rate hike next month also got a boost from data on Thursday showing first-time applications for US unemployment benefits tumbling to a 43-year low last week and housing starts surging to a nine-year high in October. Besides, the rupee taking a sharp plunge against the dollar on Friday also dampened the market sentiments. Further, the demonetisation effect continue to weigh on the bourses as it started affecting not just demand but also the supply chain with cash crunch hitting the farmers. Prices of few key commodities have fallen considerably since the move was announced amid drying up of demand. Also, fears have risen regarding production of the key commodities as farmers are not getting enough cash to buy seeds for winter crops. However, downside remained capped with NITI Aayog Vice-Chairman Arvind Panagariya’s statement that India can become a $10 trillion economy in the next 15 years, like China did in last one and a half decade. Meanwhile, sugar stocks moved higher in otherwise range bound market on the report that India’s sugar production has increased marginally by nearly two per cent to reach 7.87 lakh tonnes compared to last year, mainly on account of early crushing in states like Uttar Pradesh and Karnataka. Finally, the BSE Sensex declined 77.38 points or 0.30% to 26150.24, while the CNX Nifty dropped 5.85 points or 0.07% to 8,074.10.